Obama: Tax Credits for Alternative Fuel Cars

President Barack Obama proposed expanded tax credits and community research grants to make alternative-energy cars and trucks more attractive to buyers, as he pitched his energy agenda in the battleground state of North Carolina.

Electric, natural gas and hydrogen-powered vehicles would be covered by the plan, which Obama said is part of his strategy to buffer the U.S. against rising oil costs.

“Both you and I know there are no quick fixes to this problem,” Obama told his audience at a Daimler Trucks North America plant in Mount Holly, North Carolina. “We’ve got to continually develop new sources of energy.”

Obama has been focusing on energy in public appearances and speeches over the past two weeks as rising gasoline prices threaten to impede the recovery and the issue is being raised by the Republicans seeking to run against him in November.

The average retail price for a gallon of regular gasoline was $3.76 as of yesterday, according to the American Automobile Association. That’s up from $3.51 a year ago. The increase has been a sour note among positive economic news as data from homebuilding to car sales to jobless claims have beat forecasts.

“We’re not going to be able to just drill our way out” of higher energy costs, Obama said, repeating a message he’s been delivering to counter Republican criticism of his policies.

Factory Tour

Before speaking, Obama toured the factory, which has begun hiring more than 500 workers to meet demand for heavy-duty trucks, a sign of economic recovery. The plant, near Charlotte, makes Freightliner heavy-duty trucks as well as hybrid and natural gas trucks.

Daimler Trucks North America, a unit of Daimler AG, is a partner in an Energy Department program focused on increasing the fuel efficiency of long haul, 18-wheel trucks by 50 percent by 2015. Those trucks, about 4 percent of the on-road vehicles in the U.S., account for almost 20 percent of the nation’s fuel consumption, according to the White House.

Obama is asking Congress to make two changes in tax law to coax drivers into less-polluting vehicles. One would raise the tax credit to $10,000 from $7,500 for the purchase of a so- called advanced vehicle. The credit would be applied instantly at the dealership, according to a White House fact sheet.

Commercial Trucks

The second tax change would target buyers of electric and natural gas powered commercial trucks, including semi-tractor trailers. Those vehicles would qualify for a 50 percent tax credit for half the additional cost over a conventional truck, to help overcome the initial upfront cost.

Obama also offered a new, $1 billion program to as many as 15 U.S. cities to finance investments in clean-vehicle infrastructure, such as charging stations, which would require congressional approval. The administration is highlighting an existing research program on how to cut the cost of electric vehicles and increase their range. Action by lawmakers isn’t required, though the administration is asking for an additional $650 million for the year that begins Oct. 1.

Obama’s $1 billion plan for clean-vehicle infrastructure follows a General Motors Co. announcement that it was halting production of the Chevrolet Volt plug-in hybrid for five weeks because sales haven’t met goals.

“The president likes to talk about fairness,” Senate Republican Leader Mitch McConnell said in a Senate speech today. “The American people don’t think it’s particularly fair that at a time when they’re struggling to fill up the tank, their own tax dollars are being used to subsidize failing solar companies of the president’s choosing.”

McConnell said Obama “can’t claim” to have a comprehensive energy policy “and any time he says he does, the American people should remember one word: Keystone,” a reference to the administration’s decision to delay a permit for TransCanada Corp.’s oil pipeline.

Obama won North Carolina in 2008 by 0.3 percent, or 14,177 votes, the first Democrat to capture the Tar Heel state since Jimmy Carter in 1976. North Carolina is also tied with Florida as having the fifth highest unemployment rate at 9.9 percent in December, according to the Bureau of Labor Statistics. Only Nevada, California, Rhode Island and Mississippi are worse.

‘Bad’ Numbers

“We’ve had a real hit” said Andy Taylor, a political science professor at North Carolina State University in Raleigh. “Those headline numbers have been bad and haven’t helped the administration.”

The manufacturing sector, which accounts for one of five jobs in the state, suffered during the recession, with job losses in transportation, food and textiles among others. The state has lost about 110,000 jobs since Obama took office, government figures show.

Obama’s visit to North Carolina, the 13th of his presidency, follows an appearance by first Lady Michele Obama on March 2. By the end of last week, the campaign had opened offices in Winston-Salem and Asheville, bringing to nine the total in the state, The News & Observer reported.

“We’re looking forward to getting a lot of attention,” Taylor said. “The race will be very, very close.”